Baleno: Expanding Retail Operations in China

Abstract

Fuelled by impressive economic growth in recent years, consumers' demand for clothing in China had been increasing. Expenditure on clothing of urban households rose from 374.19 billion yuan in 2004 to 509.29 billion yuan in 2006 (an increase of 36.1%), and for rural households, this increased from 91.66 billion yuan to 118.36 billion yuan (an increase of 29.1%).Baleno, a casual wear retailer, had used mainly franchising to expand its retail network. This method allowed for rapid expansion but controlling franchisees in China could be problematic. Opening directly managed stores, on the other hand, required more capital. Baleno needed to decide how it should keep up with the growth in demand and with the expansion of its competitors.Fashion retail, expansion modes, franchising, market segmentation